NEW YORK - Dropbox's initial public offering stores good news for upcoming tech floats. The online-storage firm’s shares rocketed about 50 percent in its first hours as a public company. The rousing welcome for a $12 billion tech firm aimed at consumers is heartening for Spotify. And it could accelerate IPO plans for firms like Airbnb and Lyft.

Dropbox is big – even in 2015 a funding round valued the firm at $10 billion. Plentiful capital has allowed Uber, Airbnb and dozens of smaller firms to raise substantial sums without going public. However, these so-called unicorns – private companies with a valuation of $1 billion or more - can face a tougher reception when they market a greater chunk of their stock in a float. Selling shares at a lower headline valuation can be a problem, as employees with underwater options may flee. It also creates the impression of a firm going backwards. Dropbox doesn’t have this worry after its debut.

Moreover, it’s a consumer play. Sure, Dropbox sells to enterprises. But it has more than 500 million users and no customer accounts for more than 1 percent of revenue. The opportunity is converting free users into paying ones - only about 2 percent currently stump up for the company's service. However, Amazon, Google and Apple also want these customers.

Friday's reception implies investors are focused on opportunity. Dropbox is valued at close to eight times 2018 revenue, assuming it continues to grow at about the same rate it did in 2017. Rival Box, aimed at the enterprise market, is valued at about five times.

This may indicate a shift from last year, when tech firms aimed at stable enterprises tended to be greeted more warmly than fickle consumer-focused ones. For example, data-analytics firm Alteryx and online-security firm Okta have more than doubled since their floats, while social network Snap and meal-delivery service Blue Apron have lost about 5 and 80 percent of their respective IPO prices.

This is good news for tech firms in the IPO pipeline. Online music firm Spotify and ride-hailing service Lyft have been valued at about $19 billion and $12 billion respectively on private markets, are harnessed to consumers and are close to going public. Airbnb, Pinterest and Uber Technologies have lagged somewhat behind. Dropbox’s success may speed up big tech offerings.

CONTEXT NEWS

- Dropbox shares rose sharply in its first hours of trading as a public company on March 23. The cloud-based storage company’s stock was trading at $30.70 at midday, after pricing at $21 the previous day. The open-market price gives Dropbox a market capitalization of about $12 billion based on shares outstanding and assuming underwriters exercise a greenshoe option. The company has 500 million users and had revenue of $1.1 billion in 2017 – an increase of 32 percent from the previous year.

- Dropbox founder and Chief Executive Andrew Houston will own 24 percent of the firm after selling 2.3 million shares in the offering.

- On March 21, Dropbox raised the expected range of the pricing by $2 to $18 to $20 per share. A funding round in early 2015 had valued the firm at $10 billion.

(Editing by Jennifer Saba and Martin Langfield)

© Reuters News 2018